CMPS&F Pty Limited v Crooks Mitchell Ltd

REASONS FOR JUDGMENT 1 These are my reasons for making orders on 5 December 2013 that the Scheme Meeting convened by the plaintiff pursuant to Order (1) made on 4 November 2013 not be held. 2 On 4 November 2013, I made orders convening a meeting of the shareholders of Cape Alumina Limited (CBX) to be held on 9 December 2013 and approving for dispatch a Scheme Booklet which was Exhibit 1 in these proceedings. Words used in these reasons will have the same meaning as in my reasons for making the orders on 4 November 2013: Cape Alumina Limited, in the matter of Cape Alumina Limited [2013] FCA 1212 (Cape Alumina (No 1)). 3 On 20 November 2013, I made orders under s 1319 of the Corporations Act 2001 (Cth) (Corporations Act) approving for dispatch to CBX shareholders a Supplementary Scheme Booklet. In essence, CBX wished to advise shareholders of supplementary disclosure about a dispute between the proposed acquiring company, MetroCoal Limited (MTE) and Tenement to Terminal Limited, the existence of which was summarised in Section 10.12 of the Scheme Booklet: Cape Alumina Limited, in the matter of Cape Alumina Limited (No 2) [2013] FCA 1238. 4 On 20 November 2013, the Queensland Cabinet and Ministerial Directory released a media statement entitled "Newman Government protects Steve Irwin Reserve on Cape York" which advises (among other things) that open cut mining would be banned in the Steve Irwin Wildlife Reserve in perpetuity. It had been the short to medium term priority of MTE and CBX following the merger to develop CBX's bauxite assets, in particular the Pisolite Hills mine and port project near Mapoon to capitalise on the global market for bauxite and generate positive cash flow: see Cape Alumina (No 1) at [6]. 5 On 21 November 2013 CBX and MTE executed a letter which (among other things) served as notice that both parties agreed not to proceed with the proposed scheme of arrangement because, as a result of the Queensland Government announcement, CBX's Pisolite Hills Mine and Port Project is now unlikely to be developed and the announcement may constitute a Target Material Adverse Change under the Merger Implementation Agreement between MTE and CBX dated 24 September 2013. Both MTE and CBX made announcements to this effect to the Australian Securities Exchange on 22 November 2013. 6 The Scheme Booklet had been dispatched to CBX shareholders but the Supplementary Scheme Booklet was not. 7 CBX's solicitors sought orders to be made in Chambers under s 1319 of the Corporations Act that the Scheme Meeting not proceed and the orders made on 4 and 20 November 2013 be revoked in so far as they have not been performed. Section 1319 provides as follows: Where, under this Act, the Court orders a meeting to be convened, the Court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as it thinks fit. 8 There is now substantial authority that s 1319 empowers the Court to comply with such a request where there would be no utility in the Scheme Meeting and to proceed with the meeting is likely only to incur unnecessary costs and confusion to shareholders. In CMPS&F Pty Limited v Crooks Mitchell Ltd (1997) 76 FCR 366 at 367 Burchett J remarked: I do not think that an order revoking the convening of a meeting could properly be described as "ancillary", but I do think, in circumstances where the usefulness of the meeting has been destroyed or very greatly compromised, the word "consequential" is entirely apt. It seems to me that, in the special circumstances of such a case, a direction having the effect of revoking the convening of the meeting would be consequential on their having been convened in the first place. In this case, it would be an appropriate consequential order to make, not raising the objections going to the exercise of the discretion which concerned Debelle J in Re North Flinders Mines Ltd (1996) 66 SASR 437. 9 In Re Anzon Energy Ltd (No 2) (2008) 66 ACSR 355, Lindgren J made orders dissolving a meeting which had been convened pursuant to s 411(1), held and adjourned before the scheme approval resolution was considered because Lindgren J considered that it would be wasteful to require an adjourned meeting to be held when circumstances had arisen which led to the termination of the Merger Implementation Deed. Justice Lindgren followed the reasoning of Emmett J in Re Australian Gas Light Co (2006) 57 ACSR 67. 10 I consider that it is appropriate to make the orders sought by CBX because the Scheme Meeting would now lack utility. CBX prepared an announcement to be released to the Australian Securities Exchange if the Court maked the directions and orders it sought. As the Scheme Booklets had been dispatched, I considered it appropriate that a copy of the announcement also be sent directly to CBX shareholders and I made orders accordingly. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell.